Israeli tanks tonight opened fire on the headquarters of the Palestinian leader, Yasser Arafat, according to Palestinian security officials. The move came just hours after a suicide bomber killed five people in an attack on a Tel Aviv bus.

The chief Palestinian negotiator, Saeb Erekat, said Israeli tanks had entered Mr Arafat's compound in the West Bank town of Ramallah and rained machine gun fire on the leader's headquarters. Speaking from Jericho, Mr Erekat told the Reuters news agency that two bodyguards had been hurt, but Mr Arafat was unharmed. The Israeli military has confirmed that a military operation was in progress at the compound.

This afternoon's suicide bombing injured at least 40 people. The bus was on Allenby Street, an area of Tel Aviv's main shopping and eating area previously targeted by suicide bombers, when the bomber detonated his explosives at 1pm local time (11am BST).

The blast - outside one of the main synagogues in Tel Aviv and across the street from a Starbuck's coffee shop - scorched the bus and blew out its windows. One man with blood over his bare chest was wheeled away by paramedics. Another man sat on the pavement crying.

Witnesses saw bodies being hurled from the bus. "There were arms and legs on the ground. It was a horror," said Shmuel Salomon, who owns a restaurant in the area.

The attack comes a day after a bomber in northern Israel broke a six-week lull in suicide attacks, killing himself and an Israeli policeman.

A Hamas spokesman, Ismail Abu Shanab, said he expected to see "a series of operations against the Zionist enemy, as a result of the daily brutal crimes against our people" but stopped short of claiming responsibility. Conflicting reports in the Israeli media linked the attack to Hamas and Islamic Jihad.

Israel had attributed the relative calm for its citizens of recent weeks to its strong military presence in the West Bank. It controls six of the eight main population centres, and its troops have been confining hundreds of thousands of Palestinians to their homes since June.

But the Israeli police commissioner, Shlomo Aharonishki, said before this morning's attack that Palestinian militants had been trying hard to break out. "We need to be grateful for every day that passes without an attack," he told Israel Army Radio.

Islamic Jihad claimed responsibility for the earlier attack in a statement to the Lebanese TV station al-Manar. It did not release the bomber's name for fear of Israeli reprisals against his family.

Israeli soldiers today bulldozed the family homes of two suicide bombers after Israel's supreme court rejected a petition from the relatives of Osama Nidbahar and Nabil Khaldaiya, who killed 11 people and injured 80 in an attack on a Jerusalem mall in December, to spare their homes.

The families insisted they had no idea of the two militants' intentions but the appeal was rejected.

In other violence today a 12-year-old Palestinian boy breaking the curfew to buy cigarettes for his father was killed by Israeli army fire, a according to a witness. The army said it was looking into the killing of the boy.